Good morning! It’s Tuesday, November 26, 2024, and this is The Morning Shift, your daily roundup of the top automotive headlines from around the world, in one place. Here are the important stories you need to know.
1st Gear: Newsom Won’t Include Tesla In CA EV Credit
California is going to keep offering tax incentives on electric vehicles even if the rest of the country doesn’t under the upcoming Trump Administration II. However, not every automaker is going to enjoy the same benefits. Namely, Tesla, which left northern California for Austin, Texas in 2021, will not qualify for the tax credit. The announcement was made by Governor Gavin Newsom on November 25.
Shockingly, Tesla CEO Elon Musk, a longtime critic of Newsom’s and a close Trump ally, criticized the idea of excluding Tesla from the tax credit program. He took to Twitter, posting, “Even though Tesla is the only company who manufactures their EVs in California! This is insane.” Of course, Musk has said in the past he supports ending subsidies for electric vehicles, oil and gas. From Reuters:
Trump’s transition team is considering eliminating the federal tax credit of $7,500 for EV purchases, Reuters reported this month.
[…]
Newsom said on Monday that if Trump eliminates a federal EV tax credit, he will propose creating a new version of the state’s Clean Vehicle Rebate Program that ended in 2023 and spent $1.49 billion to subsidize more than 594,000 vehicles.
“The governor’s proposal for ZEV rebates, and any potential market cap, is subject to negotiation with the legislature. Any potential market cap would be intended to foster market competition, innovation and to support new market entrants,” his office said.
The state faces financial headwinds. California faces a $2 billion budget deficit next year, a non-partisan legislative estimate said last week.
EVs account for 22% of California sales – or 293,000 through Sept. 30 – and it is unclear how much the state program would cost and if it would include the federal $4,000 tax credit for used EVs and impose the same limits on income and vehicle price.
California provided up to $7,500 for the purchase or lease of a new plug-in hybrid, battery or fuel cell EV and could potentially be paid for by the Greenhouse Gas Reduction Fund which is funded by polluters under the state’s cap-and-trade program.
[..]
California has crossed the 2 million mark for sales of zero-emission vehicles, doubling total sales since 2022.
Last month, a California official said he expects the Environmental Protection Agency to approve the state’s plan to halt the sale of gasoline-only vehicles by 2035, a proposal that major automakers have met with skepticism.
California’s rules, which have been adopted by a dozen other states, require 80% of all new vehicles sold in the state be electric by 2035 and no more than 20% plug-in hybrid electric.
Newsom and Musk have been clashing over state policies like closing Tesla’s Fremont factory during the height of the Covid-19 Pandemic and California’s transgender kids bill. The two guys do not like each other.
2nd Gear: ICE-Powered Porsches Are Sticking Around
Porsche says it’s going to keep developing combustion-engined vehicles across its model lineup in an effort to meet customer demands while sales of electric vehicles stall. Right now, the EV share of Porsche’s sales fell to 7.3 percent through September. During the same period last year, it was 12 percent, but lagging Taycan sales hurt its effort.
Previously, Porsche has said its sales would be made up of 50 percent EVs and plug-in hybrids by 2025. By 2030, BEVs are supposed to account for 80 of Porsche’s global sales. I’m not so sure that’s going to happen. From Automotive News:
“There is a clear trend in the premium luxury segment in the direction of combustion-engine cars, therefore we will react in our product cycle,” Porsche CFO Lutz Meschke said.
[…]
Porsche’s BEV sales slump was particularly acute in China, where the brand’s overall sales fell 29 percent through September, according to company figures.
Meschke said premium and luxury car buyers in China are not yet switching to full-electric cars in great numbers.
“We see steep ramp-up curves for the BEVs in China, but luxury is still missing within the segment,” Meschke told analysts on the company’s third-quarter earnings call Oct 25.
“It’s challenging not only for Porsche, but for all the European premium and luxury automakers,” he said.
Europe and the U.S. are also seeing a slowdown in the transition to BEVs, Meschke said.
There was already some evidence this was going to happen. Porsche has launched the all-electric Macan globally, but it has kept around the ICE-powered car it was supposed to replace in the U.S. and other global markets.
The automaker will continue to develop combustion engine versions of the Cayenne large SUV as well as the Panamera sedan “to give the right answer to the customer demand in the different world regions,” Meschke said.
“We are currently looking at the possibility of the originally planned all-electric vehicles having a hybrid drive or a combustion engine. We are currently in the middle of making conceptual decisions. What is clear is that we are sticking with the combustion engine for much longer,” Meschke said.
Porsche has announced plans to launch a large full-electric SUV codenamed K1 designed to sit above the Cayenne. It will be mainly focused on the U.S. and Chinese markets.
The SUV was intended to be built on parent Volkswagen Group’s new premium-focused SSP Sport electric platform. Meschke declined to answer a question from an analyst about the status of the K1.
Porsche isn’t the first company to do something like this, and it certainly won’t be the last. Between lagging EV sales and the next presidential administration, battery-powered cars may be gearing up for a rough go of it.
3rd Gear: Rivian Gets $6.6 Billion For Georgia Plant
Rivian just got a very big win. The nascent automaker, which has been struggling a bit when it comes to finances, was just awarded preliminary approval for a $6.6 billion federal loan that would support the construction of its long-planned electric vehicle factory in Georgia. Earlier this year, Rivian put the plant’s construction on hold in an effort to save money. From Bloomberg:
The loan, which includes $6 billion of principal and around $600 million of capitalized interest, would come from the US Energy Department’s Advanced Technology Vehicle Manufacturing program. Rivian Chief Executive Officer RJ Scaringe said the funds would enable the company to “more aggressively scale” production of cheaper electric sport utility vehicles.
Rivian shares jumped as much as 7.8% before the start of regular trading Tuesday. The stock has fallen more than 50% this year as the EV maker has struggled to ramp up output of plug-in pickups, SUVs and delivery vans for Amazon.com Inc., its largest shareholder.
Scaringe, 41, paused plans for a new plant in Georgia earlier this year when he unveiled prototypes of vehicles Rivian had in development: the R2 midsize SUV and the R3 and R3X crossovers. The company said shifting planned production of the R2 to its existing facility in Illinois would allow the automaker to get to market faster and save more than $2.25 billion.
Assuming Rivian is able to meet certain technical, legal, environmental and financial conditions to finalize the US loan, the company will set up a factory east of Atlanta in two phases. The first would enable the company to start production in 2028 and create about 7,500 jobs.
Rivian would set up the plant to have the capacity to make an additional 200,000 EVs in each phase. The company didn’t say in its statement issued late Monday when it expects the second phase that would boost capacity to 400,000 vehicles to be completed.
[…]
Rivian already has secured a $1.5 billion package of state and local incentives — the biggest in Georgia’s history — to build the plant outside of Atlanta. When lining up those funds two years ago, the company pledged to create 7,500 jobs by the end of 2028.
Rivian makes a really compelling product in the R1, so it’s good to see a bit of a lifeline going out so it can build the R2 and R3. If they’re anything like Rivian’s first offering, they’re sure to be very good.
4th Gear: Automatic Emergency Braking Rules Aren’t Changing
This U.S. National Highway Traffic Safety Administration is rejecting pleas from automakers to reconsider a landmark rule that would require nearly all new vehicles to have advanced automatic emergency braking systems by 2029. Some of the biggest names in the automotive industry were behind this push for NHTSA to renege. From Reuters:
The Alliance for Automotive Innovation, representing General Motors, Toyota Motor, Volkswagen and other automakers, had said the requirement that all cars and trucks must be able to stop and avoid striking vehicles in front of them at up to 62 miles per hour is “practically impossible with available technology” and had asked the agency to reconsider it.
NHTSA on Monday rejected the request but said it was clarifying some technical requirements and correcting an error in the test scenario for an obstructed pedestrian crossing the road.
The new safety rule is one of the most far-reaching U.S. auto safety regulations in recent years. NHTSA said in April the rule will save at least 360 lives annually and prevent at least 24,000 injuries as traffic deaths spiked after the COVID-19 pandemic.
Alliance CEO John Bozzella called the decision “wrong on the merits. Wrong on the science. Really a disastrous decision by the nation’s top traffic safety regulator that will endlessly — and unnecessarily — frustrate drivers; will make vehicles more expensive and at the end of the day … won’t really improve driver or pedestrian safety.”
[…]
Congress directed NHTSA in the 2021 infrastructure law to establish minimum performance standards for automatic emergency braking systems, which use sensors like cameras and radar to detect when a vehicle is close to crashing and then automatically applies brakes if the driver has not done so.
In 2016, 20 automakers voluntarily agreed to make automatic emergency braking standard on nearly all U.S. vehicles by 2022 and by December all 20 had equipped at least 95% of vehicles with AEB, but critics say there is no way to ensure effectiveness without government regulations.
NHTSA in March 2023 proposed requiring vehicles comply in three years, but automakers are now getting five years.
Bozzella has now written to President-elect Donald Trump in an effort to get him to reconsider the regulation, so I guess not all hope is lost for car companies that don’t want to include this safety tech.
